Please Don’t Give Your Money to Your Children

Dad was swindled out of his sizable net worth before he passed. It was truly heartbreaking for him but a blessing to me. Study after study shows that inheriting a sizable fortune has a terrible effect on the vast majority of the unearned rich.

It seems that what makes us strong is self-reliance. What makes us weak is feeling dependent. When I started the American Dream Project nine years ago I wanted to know what pursuits led to happiness.

I surveyed over 26,000 people and interviewed hundreds. What I discovered now seems obvious.

The value of the American Dream is in the daring pursuit of happiness far more than inheriting it. In fact, that’s what I discovered. You can neither bequeath nor inherit happiness. So we should quit trying to. I have served on several non-profit boards filled with “trust fund babies.” I have also raised investment funds from “lucky” inheritors of fortunes. Believe me; these mostly nice instant millionaires aren’t very lucky at all. Many of them are smart and extremely well educated. What’s missing is nothing less than self-respect, and self-respect is essential to happiness.

More than any external circumstance, it’s our inner opinion of ourselves that determines our contentment. The problem with inheriting serious wealth is it makes the receiver feel like they are worth-less. They live with a question of whether they could have earned what is theirs. And most seem to cover up that self-doubt with either arrogance or meekness.

I know many wealthy families that have tried to steer their children into productive lives by establishing family foundations to focus on doing good. It is a noble idea; yet I still find even with good intentions, the children philanthropists carry a certain sadness that comes from missing out on the challenge of self-determination and inner victory of finding their own path. I was lucky.

My parents paid for my college education, my first new car, and bailed me out of a few tight spots caused by life emergencies. They also allowed my first business to crater, to move my young family in with them when I was broke and couldn’t find work, and allowed me to also completely find my own career path. Instead of money my parents gave their amazing example of personal vision, resilience, and grit.

Mom and Dad refused to make decisions for me and refused to offer unsolicited advice. Instead Dad constantly encouraged me to try stuff – to quit apologizing for myself, quit trying to please everyone, and to forge my own path up the mountain. He said, “You’re a good man, what you want is good… don’t be afraid.” I grew up in a home of “just do it” – before Nike put it on a t-shirt. The lesson I learned is that as parents I believe we are too quick to try to save our children from necessary suffering. The kind of suffering that makes us mature, responsible, and moral. Developmental psychologists tell us the most important thing we can teach our kids is to clean up their own messes.

This is the essential path to self-respect. Of course there are times when children need a boost. But they want to and need to stand on their own feet and create their own lives. I am very fortunate. I’ve raised six children to adulthood. They are all independent and are excelling at vastly different, fascinating work… careers I would have never chosen for them.

Most of them started working part time in high school and continued through college and some through graduate school. They needed to because we didn’t give them personal spending money. We just decided that what they would learn from working in retail or in restaurants or even a book binding factory would be as important as what they would learn in the classroom.

It wasn’t always easy. My youngest daughter went to a college filled with wealthy kids. According to her she was the only one with a part time job and without a daddy-paid credit card. Of course it made me feel bad, but I gritted my teeth and when she turned 25 she thanked me. There is of course more to raising children than self-reliance, but I believe it’s the bedrock skill of life.

It’s the essential gift a parent can provide. So my painful coaching advice to my super high-achieving clients, many whose children drive BMWs, go to Ivy League schools, or have never worked for an hourly paycheck is please give all your money to an exceptional social enterprise focused on solving the root cause of a terrible problem.
As for your children, give them the gift of your time, your love, your enthusiasm, and self-reliance. They may gripe about having to pay for their own lives, but it’s the path most likely to enable them to love their own lives. It’s the pursuit of happiness that makes us happy.

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